Press Release

Bethesda, MD -- A
new Health Policy Brief from Health Affairs and the Robert
Wood Johnson Foundation explores a provision of the Affordable Care
Act of 2010 that is aimed at expanding access to, and strengthening
the employment-based health system.

Beginning in 2014, employers with at least 50 full-time employees
(or equivalent full- and part-time workers) will be required to
offer qualified health insurance or face penalties.
Although supporters of the provision maintain that the requirement
will increase the number of companies offering employee programs,
critics predict that many firms will opt to pay and walk away,
or, in the case of smaller firms, hold back on hiring to avoid reaching
the threshold of 50 employees.

The new policy brief examines these aspects of this requirement:

Whats in the law. Employers must provide comprehensive
and affordable health insurance coverage. Employer-provided
coverage must pay at least 60 percent of an employees health
care expenses; the remaining 40 percent, to be borne by the employee,
must cost less than 9.5 percent of an employees household
income.

What firms would pay: Employers who do not offer health
insurance will be assessed an annual tax penalty of $2,000 for
every full-time employee beyond the first 30 employees. If health
insurance is offered, but it is not considered comprehensive or
affordable, the employer must pay a $3,000 annual assessment for
every employee who declines employment-based insurance and instead
obtains government-subsidized coverage through a state exchange.

Small business exemptions: Although the law shields companies
with fewer than 50 employees from these requirements, it also
encourages those with fewer than 25 workers to offer health insurance
by making tax credits available for two years, as explained in
an earlier Health Policy Brief on Small Business Tax Credits
(January 14, 2011).

What the likely impact will be: As with other predictions
about the impact of the Affordable Care Act, estimates vary. The
Congressional Budget Office (CBO) and the Joint Committee on Taxation
estimate that by 2019, three million fewer people will have employer-provide
coverage because Americans will opt to be covered by more affordable
state exchanges. Also, many large firms will be watching to see
whether their peer companies will be willing to pay the penalties
for dropping coverageor whether they will continue to regard
health coverage as an important component of their compensation
strategies in order to attract and retain good workers.

Whats next: As the battle over the Affordable Care
Act continues, many Republican lawmakers oppose the employer requirement
and would like to repeal it. Because President Obama would be
likely to veto any repeal effort, it appears that the employer
requirement will be here to stayand is likely to be a subject
of debate in the next national election.

About Health Policy Briefs

Health Policy Briefs are aimed at policy makers, congressional staffers, and others who need short, jargon-free explanations of health policy basics. The briefs include competing arguments on policy proposals from various sides and the relevant research supporting each perspective.

-Repealing
the 1099 Provision: A future provision of the Affordable Care
Act, requiring businesses to file Form 1099 returns with the IRS
for goods as well as services to raise revenue, likely to soon be
repealed.

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears each month in print, with additional Web First papers published weekly at www.healthaffairs.org.
You can also find the journal on Facebook and Twitter and download Narrative Matters on iTunes.
Address inquiries to Sue Ducat at (301) 841-9962 or sducat@projecthope.org